Presentation Transcript

Slide1:

General Information:

General Information -Largest country in South America
-Comparable in size to the U.S.
-Tropical Climate
-Population: 182,032,604
-Official Language is Portuguese
also speak Spanish, English, and French

Economy Overview:

Economy Overview -Free Enterprise with some state intervention
-Large agricultural, mining, manufacturing, and service sectors
-Outweighs that of all other S. American countries
-Plagued with high inflation rates in past 20 yrs.
Now steadily decreasing
-Unemployment remains a major problem

The Brazilian Real:

The Brazilian Real -Official Currency of Brazil
-Formerly pegged to U.S. dollar
-Now floats independently with respect to U.S. dollar.
-Exchange Rate: 2.92 reals per U.S. dollar Brazilian Reals to 1 U.S. Dollar

Brazilian Industrial Sectors:

Embraer:

Embraer -Fourth largest aircraft manufacturer in the world.
-Close to overtaking third largest manufacturer, Bombardier.
-Started in 1969 by Brazilian government.
-Privatized in 1994.
-Based in Sao Paulo, Brazil.
-Started trading on NYSE on July 21, 2000.

Company Profile:

Company Profile -Embraer manufactures commercial, military and corporate airplanes.
-Provide aircraft that are economical to acquire and operate
-Gained success by focusing on regional jets with 37-50 passenger capacity.
-Known for aggressive management and marketing and for having competitive prices and services.
-Gained market share by undercutting competitors’ prices in regional jet market.

Defense Aircraft:

Defense Aircraft -Operations involve research, development, production, modification and support of military defense aircraft, products and related systems.
-Primary customer is the Brazilian Air Force although aircraft has been sold to the United Kingdom, France, and Mexico.
-Competitors include Raytheon, Lockheed-Martin, and British Aerospace.
-Products:
-EMB 312 Tucano and Super Tucano
-AM-X
-P 99

Corporate Jet Segment-The Legacy:

Corporate Jet Segment-The Legacy -Line of corporate jets based on ERJ 135 regional jet model.
-Designed to provide customers with a cost-effective alternative to commercial regional airline travel.
-Marketed to businesses in two models:
-Executive version
-highly customized interior based on the customer's specific requirements
-Corporate shuttle version
-partially customized and is generally intended to have business class-type seating and in-flight office design features.

Other Related Businesses:

Other Related Businesses -After-sales customer support services and the manufacture and marketing of spare parts for products.
-Activities include the sale of spare parts, maintenance and repair, and training.
-Provide structural parts and mechanical and hydraulic systems to Sikorsky Corporation for its production of helicopters.
-Limited manufacture of executive aircraft and crop dusters.

Keys to Success:

Keys to Success -Low costs
-Brazil’s low labor costs.
-Easy access to natural resources such as iron ore to make steel.
-Brazil’s weak currency has made Embraer’s products more competitive on the international market.
-High quality
-Repair and accident records rival those of competitors.
-Strong customer service and training.
-Easy customer access to parts.
-Low maintenance costs.

Keys to Success(cont.):

Keys to Success(cont.) -Strong management
-CEO Mauricio Botelho known in Brazil as a long-term strategic planner.
-Partially owned by a Brazilian financial group, Bozano, and a group of European aerospace companies.
-Government subsidies
-Favorable taxes and tariffs.
-Controversial because it has drawn
complaints from the company’s rivals.
-Canadian government has complained to the WTO on behalf of Bombardier.

Embraer’s Future:

Embraer’s Future -Effects of the War on Terror
-Experienced a significant decline in stock prices after 9/11.
- The company could end up benefiting in the long-run.
-Since most airlines are looking to cut costs, Embraer’s low-cost products are more attractive.
-Embraer focuses on regional jets for domestic airlines, which have not been targeted by terrorists thus far.
-Decline in air travel has led more companies to explore to opportunities of corporate jets, which is a key market for Embraer.
-An increase in the demand for military aircraft in smaller countries could increase Embraer’s military sales.

Embraer’s Future(cont.):

Embraer’s Future(cont.) -Short-run success will depend on the number of Embraer’s exports and the continued weakening of the Real.
-Long-run success will depend on how well the company’s new line of 70 and 100 seat aircraft performs.
-Competing directly with Boeing and Airbus in the large commercial aircraft market is a huge risk for Embraer.
-Embraer’s success also depends on the airline industry as a whole.
-An increase in terrorist attacks and a decline in air travel could have a negative effect on sales.